Information exchange

More About Information exchange

Tax Analysts provides news, analysis, and commentary on tax-related topics, including information exchange. Under bilateral tax information exchange agreements (TIEAs), a jurisdiction’s competent authority may ask for specific information from its counterpart in a partner jurisdiction related to an investigation into a taxpayer’s tax liability for specific tax years. Types of information that may be exchanged include banking details and ownership details for companies and trusts. The model TIEA was developed in 2002 by the OECD’s Global Forum Working Group on Effective Exchange of Information.

A typical TIEA will include provisions for exchange of information that is “foreseeably relevant” for both contracting parties’ ability to administer and enforce their domestic tax laws; provisions to protect the confidentiality of the information exchanged; and provisions to allow representatives from one contracting party to conduct tax investigations in the jurisdiction of the other contracting party. Also under a TIEA, information requested may be about a person who is not a resident of a contracting party, and if a contracting party does not already have the requested information, it must gather that information as long as there is no domestic interest.

Information exchange is an important tool in the fight against tax evasion. Automatic exchange of information (AEOI) has been a particularly hot topic for the past couple of years especially as the world moves toward greater tax transparency, especially with the advent of the Foreign Account Tax Compliance Act.

In February 2014, the OECD introduced a new global standard providing for the annual, automatic exchange of financial information between jurisdictions, incorporating features of the intergovernmental agreement framework under FATCA. In July 2014, the OECD released the full version of the standard, and more than 50 jurisdictions signed a multilateral competent authority agreement to implement the new standard during an October 2014 plenary meeting of the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes. G-20 leaders endorsed the standard in November 2014.